California's legislature approves consumer protection bills
California's legislature approved measures to expand oversight of student loan servicers, require licensing of debt collectors, and provide some protections to renters during the coronavirus pandemic.
The new reforms were approved Sunday and late Monday as lawmakers also passed a bill creating a powerful state agency resembling the Consumer Financial Protection Bureau with oversight and enforcement authority over nearly all financial services companies.
“The legislature sent a robust package of consumer protection laws to the governor and now the real work begins,” said Suzanne Martindale, senior policy counsel and Western states legislative manager at Consumer Reports.
Gov. Gavin Newsom also signed a tenant protection bill late Monday that provides certain renters some protection from eviction because of the pandemic. For tenants, the law states that non-payment of rent cannot be the basis for eviction in court.
California is now the first state to apply enforceable standards to student loan servicers, including banks. California’s Student Borrower Bill of Rights establishes special protections for military personnel and their families, nurses, teachers, and the disabled. The law requires that loan servicers train staff about repayment and forgiveness programs, creates new penalties for companies that trick borrowers out of repayment and public loan forgiveness rights, and gives individual borrowers new legal remedies to address predatory and abusive practices.
The law creates a Student Borrower Ombudsman Advocate within the revamped Department of Business Oversight, which will be rebranded as the Department of Financial Protection and Innovation.